What about debt?
Discussion question for April 17, 2009
What are the principles and commandments that apply to a Christian in today’s world regarding debt? How do you define “debt”? What does the Bible teach us about it? What does that mean in the context we live in, at home or at work?
Here’s my summary from our discussion.
First of all, what exactly is “debt”? In the strictest sense, it is the use of money (property) that belongs to someone else. The connotation of debt, in a negative sense, is when you are unable to repay an obligation (upon demand).
Dealing with debt can be done on a couple of levels. There is the theoretical aspect of using leverage (other people’s money) to increase your accumulation. Whether that is good or bad depends on your wise assessment of the opportunity cost and risk management. A more important measurement of the impact of debt is on a behavioral basis – how it affects your living.
From that point of view we identified five potential problems with debt:
The goal of stewardship, and the reason to avoid these potential pitfalls of debt, is to be in a position to be immediately obedient to God.
Another thing that impacted me about our discussion was the conflict between the theoritical benefits of using debt leverage versus the practical outcome, in most cases. The human element works against the theory of leverage. In the world of life insurance, we always use to hear “by term and invest the difference”, yet human nature works against follow through. We buy term and spend the difference.
So it seems as if we need to beware of sales pitches that neglect the human tendancy to not follow through. Using credit as leverage, using someone else’s money to get a better return than the cost of borrowing that money, is a tricky business because of covetousness – our desire to have now what we really cannot afford.
This came into clearer focus as a result of our discussion. Thanks guys.